It can be frustrating having to keep up with the latest foreign exchange rate movements when you’re changing up your money, whether for business or pleasure. What if there was an easier way, where you can instead rely on a trusted brokerage to undertake the time-consuming task of monitoring prices? Even better, what if you could receive a guaranteed fixed price that would remain in place for up to a year?

Our latest Foreign Exchange Report will not only provide you the latest insight into the future of the world’s most popular currencies, but also how you could save by securing a fixed exchange rate for up to 12 months with Accendo FX and other ways to avoid currency risk. Read on to find out more!

How fixed prices work

When your daily life relies on exchanging currencies, not knowing what the day to day impact of your expenses can be stressful, to say the least. So why take the added risk of paying your business’ invoices or transferring money abroad at the going market rate, whether attractive or not, when instead you can enjoy the security of Forward Contracts.

Instead of a spot rate, in which you would pay the current market price for a currency transaction regardless of future movements, a forward contract guarantees that the price of the trade is held for a given period for a specific trade value. Dependent on the currency, this can last up to 12 months and, crucially, the price of the forward will not change during this period, irrespective of market movements!

How to secure your rate

Forward contracts can be agreed between your point of contact at Accendo FX and guaranteed with a deposit of up to 5% of the trade’s value. This deposit will then be attributed to the final settlement of the forward when funds are required. The only obligation of a forward contract is that the trade is settled by the agreed upon date, regardless of market movements. See below for an example of forwards!

An example of a forward contract

Perhaps the best possible example of how a forward contract may benefit you in recent memory is Brexit. The surprise result of the EU referendum saw Pound Sterling fall sharply against both the Euro and the US dollar. Should you have used a forward, you may have managed to escape increased costs!

For example, using a forward contract you would have been able to book the purchase of your specified value of Euros before the result of the referendum at around €1.30 per £1. Subsequently, despite the sharp devaluation of Sterling, you would have been access the forward booked trade at the agreed upon value over the predetermined time frame, potentially saving you thousands! Of course, should FX markets move in your favour during that period, you are still obligated to complete the forward contract.

For a look ahead at key upcoming events that could influence foreign exchange markets, and details of how you can avoid further currency risk on popular currency pairings, just turn over the page!

How can you avoid further currency risk?

Working alongside Accendo FX, you can navigate the risks that foreign exchange markets can sometimes throw at an individual or business. Our talented team will not only help you to secure forward contracts that can help alleviate some of the pressures of dealing with FX markets, but will also provide you with timely information regarding potential pivotal events for the currency pairing that affects you.

A common strategy when undertaking a large transaction is to book a chosen percentage of the transaction cost using a forward and then leaving the rest to either a series of spot trades or even further forward trades, should the price move in your favour, effectively raising your average price.

What’s next for Pound Sterling, the Euro and the US dollar? 

Politics continue to remain a key driver of FX markets, with the fallout from the UK’s snap general election on 8 June playing a central role. The election was expected to increase Prime Minister Theresa May’s parliamentary majority, but instead ended with a Hung Parliament and fresh political uncertainty. Consequently, a Conservative minority-led government, widely seen as unstable, is now at the wheel as we begin Brexit negotiations, putting Sterling on the back foot against its European and US peers.

The UK-EU negotiations are expected to last until November 2018, the deadline proposed by head EU negotiator Barnier for an informal deal to be reached. However, key concessions will need to be made well in advance, including sensitive issues such as the rights of EU workers in the UK and vice versa, the Irish border and the UK’s leaving bill. These early negotiations could set the tone for the next 18 months, so will the UK agree to concessions to make a deal feasible or will they push a hard bargain?

Finally, the Trump administration remains plagued by ongoing investigations into possible Russian connections, fueled further by the appointment of a special counsel. Concerns that it may result in charges are offsetting optimism that fiscal policies could stimulate the economy. Whilst attempts to implement Tax Reform, Healthcare Reform and Deregulation continue, the administration has nothing to show for it. Can the President and lawmakers reach a meaningful agreement to revive the ‘Trump trade’ and dollar?

However, away from politics, macroeconomic trends are becoming increasingly important for FX markets. While the US Federal Reserve continues with its tightening cycle, recent top tier data releases have been disappointing, with Inflation falling from February highs of 2.7% as the US approaches full Employment. Will the weak data force the Fed to slow its tightening to the detriment of the USD?

It’s a similar story for the Bank of England. In June, Inflation soared to its highest level since 2013 while Wages and Retail Sales disappointed, prompting 3 of the 8 MPC members to vote for the 1^st rate hike since 2007. The ECB has also turned more hawkish on monetary policy, with markets expecting tapering to begin before end-2017. In the battle of the central bankers, who will give their currency the edge?

Over the page, our report concludes with analysis of our clients’ top three traded currency pairings, GBP/USD – or ‘cable’ – GBP/EUR and EUR/USD. Which currency pairing are you most affected by?

GBP/USD ‘Cable’

Will Cable return to 2017 highs of $1.305 (+3.0%) or pull back towards 2017 lows of $1.20 (-5.3%)?

• Cable has extended sell-off from $1.30 since election. Could a bounce from $1.26 take it back?
• Brokers are at odds when forecasting Cable in Q3, with only 44% seeing upside to current price
• Stochastics recovered from oversold; momentum turned positive for first time since May
• Directional Indicators diverging bearishly

Bullish: Nomura, Target $1.34p, +5.8%, (26 May)

Average Target: $1.264, -0.5% (22 Jun)

Bearish: RBC Capital Markets, Target $1.19, -6.1% (16 Jun)

Pricing and consensus data sourced from Bloomberg on 22 June. Please contact us for a full, up to date rundown.

GBP/EUR

Will GBP/EUR return to highs of €1.205 (+6.2%) or fall to November 2016 lows of €1.105 (-2.6%)?

• Having bounced from €1.13 2017 lows, now testing May falling highs resistance. Break out or retracement?
• Almost three quarters of brokers see upside to current price
• Momentum turned positive for first time since May
• Directional Indicators converging bullishly

Bullish: Barclays, Target €1.235, +8.8%, (16 June)

Average Target: €1.149, +1.2% (22 Jun)

Bearish: HSBC, Target €1.064, -6.3% (20 Jun)

Pricing and consensus data sourced from Bloomberg on 22 June. Please contact us for a full, up to date rundown.

EUR/USD ‘EuroDollar’

Will EUR/USD return to August highs of $1.135 (+1.2%) or pull back towards May lows of $1.086 (-3.1%)?

• Rallying from intersecting support above $1.11. Will it return to $1.13 or retrace to channel floor?
• 70% of brokers see downside from current price, although most recent updates suggest upside
• Stochastics recovered from oversold; momentum rallied to zero from negative
• Bearish kiss by directional Indicators

Bullish: Societe Generale, Target $1.16, +3.5%, (6 Jun)

Average Target: $1.12, -0.1% (22 Jun)

Bearish: RBC Capital Markets, Target $1.06, -5.5% (16 Jun)

Pricing and consensus data sourced from Bloomberg on 22 June. Please contact us for a full, up to date rundown.

Free online quotes and competitive exchange rates

Do you need to exchange currency? You could be being overcharged by thousands of pounds by your bank or bureau de change!

It’s now easier than ever to get bank-beating currency exchange rates that could save you thousands. For too long banks have dominated the FX market to the point where they will simply give you an exchange rate that may as well have been plucked from thin air. The current system is due an overhaul.

The foreign exchange market is always moving. On this premise, a new breed of Currency Exchange specialists is able to offer unparalleled services that will help you by constantly monitoring the market on your behalf. It’s now the norm for customers to expect the support of a knowledgeable and approachable account manager - your eyes and ears in the market - who’s always on hand to talk.

Quite simply, you can get commission free currency exchange at bank-beating rates and free onward transfer to your destination of choice.

Sound too good to be true? To find out how you can get better currency exchange rates and a better service for less register with Accendo FX today.

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